Suppose the nominal interest rate does reach zero and short-run output is negative. Explain how fiscal policy could be u

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Suppose the nominal interest rate does reach zero and short-run
output is negative. Explain how fiscal
policy could be used to escape a liquidity trap. Be able to explain
ways in which the central bank can use
monetary policy to raise output.

Explain how a tax cut or transfer payment increase affects the
economy in the short-run. Explain the
importance of Ricardian equivalence for these fiscal policies.